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WTI Trims Biggest Loss in Two Months on Ukraine; Brent Stable

March 14 (Bloomberg) -- West Texas Intermediate crude rose, trimming its biggest weekly decline since early January, amid concern that Crimea’s poll on Sunday on whether to split from Ukraine may heighten tensions between Russia and the West.

Futures advanced as much as 0.6 percent in New York, paring this week’s loss to 3.7 percent. Russia, the world’s biggest energy producer, warned that Ukraine’s government has lost control of the country, sparking concern the Kremlin may extend a military intervention. U.S. Secretary of State John Kerry pressed his Russian counterpart to halt a takeover of Crimea. Global oil demand will be higher in 2014 than previously estimated as economic growth recovers, the International Energy Agency said today.

“The weekend will be all about Crimea,” Olivier Jakob, the managing director of Zug, Switzerland-based researcher Petromatrix GmbH, said in a report. “If the result of the referendum can be considered as a known, the reactions from Europe, the U.S. and Ukraine is an unknown.”

WTI for April delivery gained as much as 59 cents to $98.79 a barrel in electronic trading on the New York Mercantile Exchange and traded for $98.75 as of 11:34 a.m. London time. The contract gained 21 cents to $98.20 yesterday, snapping a three- day losing streak. The volume of all futures traded was about 19 percent below the 100-day average. Prices are little changed this year.

Brent for April settlement, which expires today, rose 14 cents to $107.53 a barrel on the London-based ICE Futures Europe exchange. The more-active May contract was up 24 cents at $107.16. The European benchmark crude was at a $8.74 premium to WTI on ICE. The spread closed at $9.19 yesterday, narrowing for the first time in four days.

Sanctions Threat

The U.S. and the European Union are threatening sanctions against Russia if it doesn’t back down from annexing the Black Sea province of Crimea, which is holding a referendum in two days to join Ukraine’s former Soviet-era ruler.

World consumption will increase by 1.4 million barrels a day, or 1.5 percent, this year to a record 92.7 million a day, or about 95,000 a day more than forecast last month, according to the IEA, a Paris-based adviser to oil-consuming nations. While freezing U.S. weather has eroded oil inventories to their lowest level in more than a decade, fading demand for winter fuels coupled with a 35-year peak in output from Iraq will help replenish stockpiles, the agency said.

China Exports

WTI is decreasing for a second week after data on March 8 showed an 18.1 percent slump in China’s exports in February, bolstering concern an economic slowdown will crimp fuel consumption. Industrial output in the Asian nation expanded by 8.6 percent in January-February from a year earlier, the weakest for that period since 2009, data from National Bureau of Statistics in Beijing show.

“I can see some impact of slow growth in China on oil demand,” Abhishek Deshpande, a London-based analyst at Natixis SA, said by e-mail. “With China’s growth likely to be impacted by policies on deregulation and environmental protection as well as measures to address overcapacity, we expect only modest growth this year in Chinese demand for oil products.”

WTI futures will probably extend losses next week amid speculation that U.S. crude supplies will increase, according to a Bloomberg News survey. Thirteen of 26 analysts and traders predict futures will drop through March 21 while five respondents forecast prices will advance.

U.S. crude stockpiles rose for an eighth week to 370 million barrels in the seven days ended March 7, the highest level since December, according to the EIA, the Energy Department’s statistical arm. The gain of 6.18 million barrels was more than triple the median estimate of analysts.

“The EIA figures were weak,” David Lennox, a resource analyst at Fat Prophets in Sydney, said by phone today. “The headline numbers are still going up in terms of inventories.”

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